Data for Herron Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$	80		100%
Variable expenses		64		80%
Contribution margin	$	16		20%

Fixed expenses are $74,100 per month and the company is selling 4,600 units per month.(Input the amount as apositive value. Do not round intermediate calculations. Round your answer to 2 decimal places.)

References eBook & Resources Section BreakExercise 5-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO4] 3. value: 1.80 points Required information

Exercise 5-5 Part 1

Required:
1a.	The marketing manager believes that an $7,400 increase in the monthly advertising budget would increase monthly sales by $17,000. Calculate the increase or decrease in net operating income.

Net operating income

(Click to select)decreasesincreasesby

$

1b.	Should the advertising budget be increased ?
	No Yes

Hints References eBook & Resources Hint #1Ask your instructor a questionCheck my work 4. value: 1.80 points Required information

Exercise 5-5 Part 2

2a.	Management is considering using higher-quality components that would increase the variable cost by $6 per unit. The marketing manager believes that the higher-quality product would increase sales by 14% per month. Calculate the change intotal contribution margin.

Total contribution margin (Click to select)decreasesincreasesby

$

2b.	Should the higher-quality components be used?
	Yes No